Questions from General Investment

Q: What are some comparative advantages of investing in the following?

What are some comparative advantages of investing in the following? a. Unit investment trusts. b. Open-end mutual funds. c. Individual stocks and bonds that you choose for yourself.

Q: City Street Fund has a portfolio of $450 million and liabilities

City Street Fund has a portfolio of $450 million and liabilities of $10 million. a. If 44 million shares are outstanding, what is net asset value? b. If a large investor redeems 1 million shares, what...

Q: The Investments Fund sells Class A shares with a front-end

The Investments Fund sells Class A shares with a front-end load of 6% and Class B shares with 12b-1 fees of .5% annually as well as back-end load fees that start at 5% and fall by 1% for each full yea...

Q: You are considering an investment in a mutual fund with a 4

You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest. a. If you plan to invest for 2 years, what annual...

Q: Louise and Christopher Maclin live in the U.K. and

Louise and Christopher Maclin live in the U.K. and currently rent an apartment in London’s metropolitan area. During an initial discussion of the Maclins’ financial plans, Christopher Maclin makes the...

Q: Suppose that every time a fund manager trades stock, transaction costs

Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid–ask spreads amount to .4% of the value of the trade. If the portfolio turnover rate is 50%, by how mu...

Q: You expect a tax-free municipal bond portfolio to provide a

You expect a tax-free municipal bond portfolio to provide a rate of return of 4%. Management fees of the fund are .6%. What fraction of portfolio income is given up to fees? If the management fees for...

Q: Suppose you observe the investment performance of 350 portfolio managers for 5

Suppose you observe the investment performance of 350 portfolio managers for 5 years and rank them by investment returns during each year. After 5 years, you find that 11 of the funds have investment...

Q: Open-end equity mutual funds find it necessary to keep a

Open-end equity mutual funds find it necessary to keep a small fraction of total investments, in very liquid money market assets. Closed-end funds do not have to maintain such a position in “cash-equi...

Q: Balanced funds, life-cycle funds, and asset allocation funds

Balanced funds, life-cycle funds, and asset allocation funds all invest in both the stock and bond markets. What are the differences among these types of funds?